For the record, it’s worth noting that Russia’s swift seizure of Crimea confounds and
contradicts one of the hopeful axioms of conventional wisdom. The presumption — rarely stated
openly but widely believed — has been that the growing economic interdependence of nations reduces
traditional geopolitical conflicts. Globalization deters war. Countries have too much to lose to
risk conflicts that will antagonize trading partners and international investors. The tendency is
to “work things out” rather than threaten these vital relationships.

This vision of a world pacified by economic self-interest is largely an American one. It
projects U.S. optimism onto the rest of the world. Americans’ obsession with getting ahead defines
us. It provides a common denominator for inclusion. The shared striving for economic success mutes
differences of religion, region, race and ethnicity, where conflicts and contrasts are more
unyielding. We can all join the rush for riches without sacrificing the exclusionary aspects of our
personal identities. What worked for us can work for everyone. It is easier to settle economic
disputes than more-stubborn disagreements stemming from heritage, history and values.

Up to a point, the past half-century has vindicated this vision. Its greatest achievement is the
European Union, which started as “the common market” and demonstrated that economic integration can
muzzle the animosities of centuries of war. “Our story is of enemies making peace,” as one EU
official says. Conflicts along national lines haven’t disappeared; but they have moved from
battlefields to bureaucracies.

The end of the Cold War gave the vision another boost. The competition between capitalism and
communism was settled. The American money chase seemed to go global. Cross-border trade and
investment increased rapidly. The emergence of middle classes in some countries (South Korea,
Brazil, India, China) provided strong constituencies for economic development. Although conflicts
didn’t vanish, they seemed to originate increasingly from non-state actors (al-Qaida), regions
(Africa) and countries (Afghanistan) at the fringes of the global economy.

This economic ideology was uplifting. For some countries, it rationalized reduced military
budgets. But in annexing Crimea, Russia defied the norms of this new world order. Russia resorted
to military power, not diplomacy. It disregarded the threat to its economic interests and the
economic interests of its trading and investment partners. It flaunted its nationalism.

We’re relearning an old lesson: History, culture, geography, religion and pride often trump
economics. The nation-state remains, reminds Harvard political scientist Jeffry Frieden, author of
Global Capitalism: Its Fall and Rise in the Twentieth Century. It defines its interests on
its terms. Putin, not illogically, sees Russia threatened on its borders by an American-led
coalition that, Frieden says, “is hostile in the sense that most people in the West would like to
see Putin’s regime go — it’s authoritarian; it frustrates our interests.”

Globalization could never swamp everything else. Economics is not omnipotent. One blow to this
mythology was the 2008-09 financial crisis. Markets promote prosperity and deliver benefits; but
they also stir instability and impose costs. The world may be flat, as columnist Thomas Friedman
argued in his 2005 book, in that modern societies compete and cooperate in a large global system.
But the world remains round in the sense that traditional geopolitical conflicts, aspirations and
pressures often dictate events. (Think Iran.)

What’s left is a messy mix of old and new. Countries pursue their goals in ways that involve,
but are not limited to, their economic interests. (Think China and, yes, the United States.) Global
economic integration has run ahead of political integration, and the divergence is a source of
instability. Putin surely knew that his move against Crimea would have adverse repercussions — and
they have. Writes one
Financial Times commentator: “Russian companies and banks have withdrawn billions of
dollars of deposits from U.S. and European banks, fearful that the money could be seized or frozen
in the event of tough sanctions. Likewise, Western institutions have been busy minimizing their
exposure to Russian banks and industrial companies.”

The financial turmoil has (so far) been limited and localized. The same can be said of the
sanctions imposed by the United States and the EU to deter further Russian moves against Ukraine.
These have been tempered, for understandable reasons. As diplomatic levers, the tools of
globalization are a double-edged sword. Mutually beneficial economic transactions, if reversed
abruptly or forcefully, can become mutually destructive.

All this could change in a flash. Crises are inherently hard to predict and subject to
miscalculation. Whatever happens, we’ve been given a harsh refresher course in realpolitik.